After months playing catch-up with inflation, central bankers were starting to believe they have finally pegged interest rates at just about the right level to keep a lid on prices without completely throttling the economy.
Now, to complicate matters for a professional caste which prides itself on being data-driven, the Middle East is throwing a new set of real but unquantifiable risks into their equations.
While any impact may be minor next to the human tragedies in the conflict zone itself, it would be bad news for a weakened global economy which, in the words of the International Monetary Fund, is already just"limping" along. That calculation has, so far, not been shaken by the 10% rise in oil futures to around $94 since Hamas' October 7 strike on Israel - a gain which adds a tenth of a percentage point to the"core" measure of underlying inflation watched by central bankers.
ECB rate-setter Yannis Stournaras, the governor of the Greek central bank, argued that Europe had broadly managed to absorb the effects of rising energy costs triggered by the Ukraine war and hoped it could do the same if further shocks emerged. "When uncertainty is so high, it's hard to say how next year's wage talks will play out," said Tetsuya Hiroshima, the Bank of Japan branch manager overseeing the Tokai central Japan region that is home to auto giant Toyota.
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